Understanding Ground Rent In Maryland

Real Estate and Other Housing
Homeownership
Understanding Ground Rent in Maryland

Understanding Ground Rent in Maryland

Topics on this page:

What is Ground Rent? How do I know if a residential or commercial property goes through ground lease? What if I can not contact the ground lease holder? What takes place if I stop working to pay ground lease? What does it mean to redeem ground lease? Just how much does it cost to redeem ground lease?

What is Ground Rent?

In particular circumstances, a house owner owns your house they live in but not the land the house sits on. Another person (the ground lease holder) owns the land and rents the land to the property owner. Under Maryland law, a ground lease holder is entitled to rent payments from the owner of the home that is located on their land. These payments are called ground rent.

Ground rent is most typical in the Greater-Baltimore genuine estate market however exists throughout Maryland. Ground lease payments generally range from $50 to $150 per year and are usually paid semi-annually (two times a year). The language of the ground lease will set out the conditions of payment. A ground rent lease is normally for 99 years and restores forever.

Ground lease deals are different from regular property owner and renter relationships. This is because the ground lease owner has no right to take back any residential or commercial property unless the tenant does not pay lease. That is, the ground lease holder doesn't have a reversionary right to the residential or commercial property or any structures constructed on it unless the homeowner stops working to make the required payments. If the leaseholder is current with their ground lease payments, the residential or commercial property remains under their control.

The house owner is accountable for upkeep of the land and any improvements on the land, including improvements made to the home itself (Kolker v. Biggs, 203 Md. 137, 141 (1953 )). The homeowner has the authority to modify, remodel, and reconstruct the residential or commercial property as they want, but they must guarantee that their actions protect the worth of the land (Crowe v. Wilson, 65 Md. 479, 484 (1886 )). Additionally, it is the sole responsibility of the property owner to procure and pay on any energies that service the residential or commercial property.

How do I know if a residential or commercial property undergoes ground lease?

When a residential or commercial property is noted for sale, the residential or commercial property description need to note whether the residential or commercial property has any relevant ground lease. If the residential or commercial property is noted as "Fee Simple," the listing includes both your home and the residential or commercial property (ground) in the purchase cost - there is no ground rent. If there is a sign of "Ground Rent" in a listing, it shows that a charge needs to be paid to the owner of the ground on which the residential or commercial property sits.

If you own a home, or are aiming to buy a home, you can figure out if a residential or commercial property goes through payment of a ground lease by looking at the deed. Ground rent deeds are submitted in the land records of the Circuit Court in the county where the residential or commercial property lies. In many cases, a deed for numerous ground leas owned by one owner will be composed. Land records can be found on the site mdlandrec.net.

Maryland law needs that ground lease holders register ground rent leases on the Maryland State Department of Assessments and Taxation's (SDAT) Ground Rent Registry. If you are unsure that your residential or commercial property has a ground lease, you can view the registration status through SDAT's Real Residential or commercial property Search. (When seeing the residential or commercial property record, click on "View Ground Rent Redemption")

If a ground lease is registered for your residential or commercial property, you are bound to pay the ground lease to the ground lease holder. You need to contact the owner noted on the registration kind regarding payment of the ground lease or to notify the owner that you want to redeem your ground rent. It is likewise your obligation to notify the ground lease holder if you change your address or transfer ownership of the residential or commercial property. If you are a ground rent occupant (property owner) or leaseholder and you have a concern, it is an excellent concept to contact an attorney.

Read the law: Md. Code, Real Residential Or Commercial Property § 8-703